Shares of Las Vegas Sands Corp. soared Thursday after the casino operator reported impressive fourth-quarter gains because of its growth in China.
THE SPARK: The company reported after the market closed Wednesday that it fiscal fourth-quarter profit jumped 35 percent, based largely on its expanding business in the Chinese gambling enclave of Macau.
Las Vegas Sands earned 54 cents per share for the period on an adjusted basis, falling short of market expectations of 60 cents per share. But its revenue jumped 21 percent to $3.08 billion, exceeding forecasts of $3.02 billion.
THE BIG PICTURE: Macau is the world's biggest gambling market and the only place in the world's most populous nation where gambling is legal.
Las Vegas Sands and other casino operators have flocked to the region, known both for its high-roller gamblers and a growing base of middle-class Chinese who have begun to frequent the casinos. The company reported Wednesday that it had 11 million visitors to its four Macau properties during the fourth quarter alone.
Billionaire Sheldon Adelson, who runs the company, acknowledged Wednesday on a call with investors that his U.S. sites have taken a back seat to Macau, saying that the U.S. market is near or is already saturated. But said he is reluctant to sell any domestic properties because that would give a competitor a chance to grab a share of the convention business that he is widely credited with pioneering.
THE ANALYSIS: Nomura analyst Harry Curtis noted that the company has increased its market share in Macau and appears to be poised for more growth there from added rooms and tables.
The analyst also noted that the company has delivered about $3.1 billion back to shareholders in 2012 through dividends, and there is still room for it to return more ahead.
Curtis increased his earning expectations for the Macau subsidiary and raised his price target for Sands' stock to $61 from $57.
SHARE ACTION: Shares jumped $3.20, a more than 6 percent gain, to $54.76 by early afternoon. Its shares have traded between $34.72 and $62.09 in the past 52 weeks.